For various reasons—such as loose underwriting practices, disreputable mortgage loan originations, homeowners experiencing greater difficulty in replacing a lost job in the face of high unemployment, and many so-called “underwater” homeowners owing more on the mortgage debt for the home than the amount for which the home could be sold—in recent years the number of foreclosures in the US has become relatively large.
An omnibus-style foreclosure moratorium was put into place when Federal Housing Finance Agency (“FHFA”) took over Fannie Mae and Freddie Mac in 2008, however, the moratorium was lifted several months later.
In early 2009, a government-backed foreclosure-prevention solution called Making Home Affordable Program or “HAMP” was attempted. Although some homeowners have avoided foreclosure and been helped through HAMP, generally the total number of mortgage modifications has been quite low compared to government projections as the program began.
Another aspect of the mortgage foreclosure crisis has been that, in about fall 2010, significant press coverage emerged of lender-side foreclosure practices such as so-called foreclosure affidavit robo-signing and other improper or suspect practices.
Policymakers and citizens have a spectrum of views as to what—if anything—should be done on certain foreclosure fact patterns. Even certain policymakers or citizens who are disinclined to want to “help” any particular family facing foreclosure and who may tend to be laissez-faire about letting each distressed or ejected family fend for itself, nonetheless may consider that to permit foreclosures in the aggregate, or for a certain region, to reach large numbers could be problematic and require intervention.
Solutions and tools are needed that are useable across a wide range of fact patterns, as well as that are useable to deal with a problematic foreclosures trend at various times during the crisis especially including relatively early if such a trend is emerging.